U.S. rice supply is fine, let's keep it that way

Betsy Ward, President and CEO USA Rice Federation | May 23, 2008

Near panic ensued for almost two weeks as intense media attention about a global rice shortage and the decision by some Sam's Club and Costco stores to limit rice purchases for their customers caused shoppers in some areas in the United States to clear the shelves of rice. American consumers have no cause for alarm.

Unlike many nations that import the majority of their rice, U.S. rice farmers grow nearly 90 percent of the rice consumed by Americans each year.

They do that with half their crop and export the other half to consumers around the world.

Media attention was driven by news of increasingly tight supplies and rapidly escalating prices in many rice-producing countries, particularly in Asia, the Middle East and Africa.

The price increases began in the fall of 2007 following several years of strong global demand.

Rising fuel and fertilizer costs and recent full or partial export bans by major export markets prompted a one- two-punch of high costs and reduced supplies. Despite the media coverage and high prices, global supplies are adequate.

Recent news reports notwithstanding, American farmers continue to provide a safe, affordable and abundant food supply for U.S. consumers. For the 98 percent of U.S. farms owned by families, U.S. farm programs have served to protect those families and help ensure an adequate U.S. food supply.

In fact, the club stores limited purchases to four 20-pound bags per person per visit — nearly four times the amount of rice the average American eats in one year. The limit was an effort by those retailers to ensure that their business customers would have an equal opportunity to buy rice, in light of some hoarding that started on the West Coast. The bigger story should have been how we ensure the domestic food supply, which will require continued support for the American farmer.

Like other U.S. farmers, U.S. rice producers are faced with high fuel and fertilizer costs and are experiencing the same budget concerns of average Americans. Enacting a strong farm bill benefits not only American farmers, but at a time of increasing global demand for rice, has implications beyond U.S. borders.

Global situation

Only 7 percent of global rice production is traded internationally, which means any government interference in export or import markets can have a dramatic impact on rice supplies and prices. Government restrictions in countries such as India, China, Egypt and Vietnam have contributed to supply concerns in an already tight export market.

These embargos by major exporters pushed prices up rapidly, and currently over 30 percent of global trade in rice is under restriction.

As the fourth largest exporter of rice, the United States has always been a supporter of free and open trade. With Asia accounting for nearly 90 percent of global rice consumption, government rice export bans are designed to ensure an adequate domestic supply while controlling prices in those countries where rice is a staple of the local diet. But such bans make the supply and price situation worse for importing countries and threaten the stability of the global rice trading system.

Supply and demand are cyclical over time. Supply will catch up to demand. In the short term, harvesting of the spring crop in Southeast Asia is about to begin. Harvesting of the U.S. crop begins in July and ends in September.

The availability of rice from those crops will ease some of the pressure driven by world demand.

More importantly, it is essential for the agricultural stability and security of American farmers and consumers that Congress pass, and the president sign into law, a farm bill that continues to provide farmers with the necessary tools to maintain a stable and affordable food supply for Americans and the foreign markets we supply.

Then American rice farmers can continue to grow and abundant affordable grain that so many consumers now enjoy here and abroad.